Gold prices in terms of US dollar (XAU/USD) continued to trade near multi-year trough on Thursday and ended the day at 1091 levels. The pair retested fresh five year lows near 1087 levels as the recent Fed rate-hike chatter picked-up pace after US unemployment claims came in at the lowest level since November 1973. The pair tumbled solely on rate-hike talks completely ignoring broad USD weakness.
XAU/USD extended its bearish momentum and printed fresh five year lows at 1076.77 in early Asia on Friday. A big miss on the China manufacturing PMI fuelled concerns about the gold demand from world’s second largest consumer of the yellow metal, knocking-off XAU/USD to new multi-year lows. Chinese factory production contracted at the steepest pace in 15 months in July with the Caixin China manufacturing PMI rose from 49.4 in June to a preliminary 48.2 in July. Later in the New York session, a set of US data releases including new home sales and manufacturing PMIs may provide fresh cues on the greenback, eventually impacting the XAU/USD pair.
Technically, XAU/USD looks extremely oversold as the daily RSI stands at 15 and still aims lower, suggesting no respite for bulls as yet. Traders seems to sell-off of any recovery seen in gold prices anticipating further weakness in gold prices on improving US fundamentals. Hence, to the downside, floors remain open for a test of 1070 levels below a break of 1076.77 (Today’s Low). A fresh sell-off could trigger below 1070 – psychological levels, dragging the pair to 1044 (Feb 2010 lows). To the upside, 5-DMA has been acting as a strong resistance over the past seven sessions or so and hence the pair could once again test 5-DMA located at 1094 levels, beyond which 1100-1105 levels could be revisited.
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